While major Big Box retailers have struggled to keep pace with consumer-driven demands for instant gratification, Sears Holdings has come up with new innovations to anticipate and serve shoppers with a new one-day ground delivery service supported by a dynamic DC network.

When an industry is changing rapidly, companies must adapt in order to survive. In this whitepaper, a global publisher was seeking a partner that could mitigate risk and build a platform flexible enough for their shifting customer expectations. The solution enabled the company to rewrite their operations game plan and transform their supply chain.

Join our panel of leading economic and transportation analysts as they share their exclusive insight on where rates are headed and the issues that will be driving those rate increases over the next 12 months.

Top 50 trucking companies: Emerging from the shadows

Leading trucking company CEOs say it’s time to pay down debt and put profit to work to recapitalize their businesses - all at a time of tightening capacity. For shippers, the days of rock bottom rates could be long gone.

“Customers understand it…Yield improvement is very important right now. It’s been three or four tough years, and we need to rebound in terms of profitability in order to reinvest in our businesses.” - Bill Logue, President and CEO of FedEx Freight

2011: Time to recapitalize, reorganize
This year is a time for change, top carrier executives agree. Having ridden out the storm, leading trucking executives say it’s now time to focus on profits. Fleets need money to recaptitalize after three lean years and shippers should be bracing for higher freight rates across the board, they say.

“Customers understand it,” says FedEx Freight’s Logue. “Yield improvement is very important right now. It’s been three or four tough years, and we need to rebound in terms of profitability in order to reinvest in our businesses.”

That’s already starting to happen. Last year, sales of new Class-8 trucks rose nearly 15 percent year over year, while medium-duty truck sales zoomed 24.7 percent to 271,992 units, according to WardsAuto.com.

Carriers are adjusting their networks to meet customers’ needs. Often, that has meant reinventing long-haul truckload networks into a series of regional networks in order to place trucking equipment and drivers closer to their customers as shippers have increasingly created a series of five or six regional distribution networks to cover the country.

“We’ve been a long-haul trucker for 75 years, but now we have 50 percent of our business in regional configuration,” says Schneider’s Rourke. “We have reinvented ourselves.”

That’s because that’s where shipping is going. Because more long-haul freight is moving on the railroads, Rourke says the over-the-road emphasis is on short-haul (under 750 miles) going by truck.

“Previously, in our long-haul network, we might have dispatched a truck once a day,” Rourke says. “In our new regional model, we dispatch that truck on average one and a-half times a day. The intensity has picked up the entire pace across our operation.”

This has occurred in response to changing shipper demands. “They’ve deployed inventory closer and closer to the end user, whether it’s industrial or retail freight,” Rourke says. “We’ve studied the demands of the market and that’s why we’ve made the change.”

Averitt Express, No. 13 on the LTL list, has historically been a Southeast regional carrier. But it has changed with the times, joining Pitt Ohio and four other regional LTL carriers to form the Reliance Network. That consortium, launched in 2009, has grown to be the eighth-largest LTL network nationally, according to a recent Raymond James analysis.

“Regionalized distribution networks are popular in the industry because they offer quick and flexible services,” says Phil Pierce, Averitt’s executive vice president of sales and marketing. “However, many shippers have long-haul LTL needs. The challenge with regionalized networks has been shipping outside of the network; so, in response to this, Averitt participated in forming the Reliance Network.”

Similarly, FedEx Freight recently transformed its operations from separate long-haul and regional operations into one network handling both types of freight. It also changed the nomenclature from “regional” and “long haul” to “expedited” and “economy” and pricing that freight accordingly.

More and more, freight is being priced according to its distinct characteristics and its cost within a carrier’s network. Shippers who tend “driver-friendly” freight (on pallets with no waiting time for drivers on pickups and deliveries) will be getting spared the higher increases that other customers might face.

“If a shipper is making it as easy as possible for freight to be picked up, that allows us to be much more flexible on rates,” adds FedEx Freight’s Logue.

About the Author

John D. SchulzContributing Editor

John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. He is known to own the fattest Rolodex in the business, and is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis. This wise Washington owl has performed and produced at some of the highest levels of journalism in his 40-year career, mostly as a Washington newsman.

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